Quotation of the Day…

(Don Boudreaux)

Tweet

… is from P.J. O’Rourke’s 2007 book, On the Wealth of Nations, as quoted on page 79 of Eamonn Butler’s 2021 volume, An Introduction to Trade & Globalisation:

To give Adam Smith’s case against mercantilism in extreme concision: imports are Christmas morning; exports are January’s MasterCard bill.

DBx: Very nicely said.

The essential point here is not that imports are paid for with borrowed funds; sometimes they are, sometimes they aren’t. The essential point is that imports are the goal – the ultimate purpose – of trade, and exports are the means of achieving this goal.

In short, imports are a benefit; exports are the cost of obtaining that benefit. Incurring this cost in order to reap a higher benefit means that incurring this cost is worthwhile, but it does not mean that this cost is the benefit.